Philippine Charity Sweepstakes Office v. Aguinaldo
REITERATIONFacts
The Antecedents: This case concerns the disallowance of various benefits and allowances paid to employees of the Philippine Charity Sweepstakes Office (PCSO) Camarines Norte Provincial District Office for the calendar year 2009. These disallowed payments, totaling PHP 2,020,452.40, include Hazard Pay, Rice Allowance, Christmas Bonus, Staple Food Allowance, Grocery Allowance, Educational Assistance, Anniversary Bonus, Signing Bonus, and Revenue Performance Incentive Pay. The disallowances were based on alleged violations of pertinent laws and regulations, including the General Appropriations Act (GAA), specific Republic Acts concerning bonuses, and administrative issuances limiting the amounts and conditions for such benefits. The core of the dispute lies in whether these payments, authorized under a Collective Negotiation Agreement (CNA) between PCSO and the Sweepstakes Employees Union, were legally permissible and properly approved. Procedural History: The disallowances originated from Notices of Disallowance (ND) issued by the PCSO Audit Team in February 2011. PCSO filed a Memorandum of Appeal with the COA Regional Office No. V, which partially granted the appeal, modifying one of the disallowances. Upon automatic review, the COA-Commission Proper (COA-CP) affirmed the disallowances with further modifications in its Decision No. 2019-309 dated August 9, 2019. PCSO's subsequent Motion for Reconsideration, arguing for post-facto presidential approval, was denied by the COA-CP in its Assailed Resolution dated January 28, 2022. This Resolution affirmed the disallowances and reinstated the liability of passive recipients to refund the amounts received, citing the Madera ruling. The Petition: The Philippine Charity Sweepstakes Office (PCSO) and its employees, represented by Irma S. Guemo, filed this Petition for Certiorari with Prayer for Temporary Restraining Order (TRO) under Rule 64 in relation to Rule 65 of the Rules of Court. They assail the COA-CP's Resolution dated January 28, 2022, which affirmed the disallowances of various benefits and allowances granted to PCSO employees in Camarines Norte for CY 2009. The petitioners argue that the COA gravely abused its discretion in disallowing these payments. They contend that the PCSO Board is empowered to fix employee compensation, that the benefits were part of a long-standing compensation package, that the funds were sourced from PCSO's operating fund, and that ex post facto approval by the Office of the President validated the grants. The petition seeks to reverse the Assailed Resolution and lift the Notices of Disallowance.
Issue(s)
Whether the Commission on Audit (COA) gravely abused its discretion in disallowing the payment of various allowances and benefits to PCSO employees. Whether the purported ex post facto presidential approval validates the disallowed benefits. Whether the approving and certifying officers, as well as the passive recipients, are liable to return the disallowed amounts.
Ruling
The Petition for Certiorari with Prayer for Temporary Restraining Order is PARTLY GRANTED. The Resolution of the Commission on Audit-Commission Proper dated January 28, 2022, is MODIFIED. Petitioners Edna M. Teoxon, Rowena E. Villespin, Eric D. Basit, and Ela C. Peña, as passive recipients, are excused from returning the disallowed amounts due to their prior exoneration by the COA becoming final and executory. Petitioner Estrella P. Abasolo is solidarily liable as an approving/certifying officer for Hazard Pay, Staple Food Allowance, Grocery Allowance, and Revenue Performance Incentive Pay. Petitioner Remeliza Jovita M. Gabuyo is solidarily liable as an approving/certifying officer for Hazard Pay. The COA is directed to clarify the correct amount of Educational Assistance for which petitioners Gabuyo and Abasolo are liable to return.
Ratio Decidendi
On Issue 1 (Propriety of Disallowance): The Court found that the disallowance of the various CNA benefits by the COA was proper. The benefits were disallowed for violating specific laws and administrative rules, such as the lack of a certification from the Department of National Defense for Hazard Pay, exceeding the maximum amount for Christmas Bonus as prescribed by law, and lacking the required favorable review by the Department of Budget and Management (DBM) and approval of the President for other allowances. The Court reiterated that the authority of a GOCC's Board to fix compensation is not absolute and must comply with pertinent laws and compensation rules. The purported ex post facto presidential approval, as evidenced by the letter from Executive Secretary Ochoa, was deemed insufficient to validate these disbursements because the letter did not clearly specify the benefits being approved, and more importantly, some disbursements outrightly violated provisions of law. The Court emphasized that an executive act is valid only if it is not contrary to law or the Constitution. On Issue 2 (Effect of Ex Post Facto Presidential Approval): The Court held that the ex post facto presidential approval, as evidenced by the letter from Executive Secretary Ochoa, could not serve to defeat the COA's disallowances. Several reasons were cited: (a) the disallowances were not solely due to a lack of presidential and DBM approval, but also due to outright violations of specific laws, such as the requirement for a DND certification for Hazard Pay and the statutory limits on Christmas Bonus. (b) The letter from ES Ochoa was vague and did not clearly identify the specific benefits being approved, making it impossible to conclude that it covered the disallowed benefits. (c) The letter itself directed PCSO to strictly comply with Executive Orders imposing moratoriums on increases in benefits. The Court reiterated its previous rulings that where an express provision of law prohibits the grant of certain benefits, the law must be enforced even if it prejudices parties due to errors by public officials. On Issue 3 (Liability of Officers and Recipients): The Court applied the principles from Madera v. Commission on Audit. Passive recipients (petitioners Edna M. Teoxon, Rowena E. Villespin, Eric D. Basit, and Ela C. Peña) were excused from refunding the disallowed amounts because the COA had already absolved them in a prior decision that became final and executory. Petitioner Estrella P. Abasolo, who was both a payee and a certifying officer, was held solidarily liable for certain disallowed benefits (Hazard Pay, Staple Food Allowance, Grocery Allowance, and Revenue Performance Incentive Pay) because her certifications that the charges were legal, necessary, and under her direct supervision were incorrect given the lack of proper approvals and legal basis. Petitioner Remeliza Jovita M. Gabuyo, who certified the completeness of supporting documents and availability of funds for Hazard Pay, was also held solidarily liable for Hazard Pay because her certification of complete supporting documents was erroneous due to the missing DND certification. For other benefits where their certifications were considered ministerial and not determinative of the legality of the grant, Abasolo and Gabuyo were deemed to have acted in good faith. The Court directed the COA to clarify the correct amount of Educational Assistance for which Abasolo and Gabuyo are liable.
Main Doctrine
The Commission on Audit (COA) has the power to disallow expenditures that are irregular, unnecessary, excessive, extravagant, or unconscionable. Even if benefits are granted through a Collective Negotiation Agreement (CNA) and purportedly approved post-facto by the Office of the President, such grants are void if they contravene existing laws, such as limitations on the amount of bonuses or requirements for hazard pay certifications. The liability for disallowed amounts depends on the nature of participation, with approving officers being liable if they acted in bad faith or with gross negligence, and recipients liable unless they received the amounts in good faith and rendered services, or are otherwise excused by COA or the Court. Procedural infirmities, such as late filing and non-payment of docket fees, can lead to the dismissal of a petition, but the Court may still rule on the merits to prevent grave injustice.